Appeal details
Counselvise Citation
[2009] 115 COUNSELVISE.COM (IT) 0257 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 7 month(s) 25 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-10-2009
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Next Hearing Date
12-10-2009
Assessment Year
misc
Appeal Filed On
21-02-2005
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL, B-BENCH, AHMEDABAD. BEFORE: SHRI T K SHARMA, JUDICIAL MEMBER, AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER. ITA NO.553/AHD/2005 (ASSESSMENT YEAR 1989-1990) SHRI. BHARAT N. PATEL 20, PATEL SOCIETY, C.G. ROAD, ELLISBRIDGE, AHMEDABAD. VERSUS C.I.T. (APPEALS|)-XVI, AHMEDABAD. (APPELLANT) (RESPONDENT) PAN: ACJPP 1375 Q FOR THE APPELLANT: SHRI. MAHESH CHHAJED , AR FOR THE RESPONDENT SMT. NEETA SHAH, SR. DR ORDER PER D C AGRAWAL (ACCOUNTANT MEMBER): THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FOLLOWING GROUNDS:- 1. THE LD. C.I.T. (A) HAS ERRED IN LAW AND ON FACT S IN NOT CONSIDERING THE ISSUES RELATING TO JURISDICTION OF THE LEARNED A.O. ON THE APPELLANT. 2. THE LD. C.I.T. (A) HAS ERRED IN LAW AND ON FACT S IN UPHOLDING THE VALIDITY OF NOTICE ISSUE U/S. 148 OF THE ACT. 3. THE LD. C.I.T. (A) HAS ERRED IN LAW AND ON FACTS IN LAW AND ON FACTS IN UPHOLDING THE ADDITION MADE BY THE LEARNED A.O. OF RS. 25,20,000/- AS LONG TERM CAPITAL GAIN. 2. THE FIRST ISSUE RELATES TO JURISDICTION OF THE A SSESSING OFFICER, THOUGH THE ASSESSEE HAS NOT DIRECTLY RAISED THE ISS UE OF REOPENING THE ASSESSMENT, BUT IT CAN BE INFERRED AFTER THE READIN G OF ORDER OF THE LD. 2 ITA NO.553/AHD/2005 (ASSESSMENT YEAR 1989-1990) COMMISSIONER OF INCOME TAX(APPEALS) THAT ASSESSEE I NTENDED TO RAISE ISSUE OF REOPENING ASSESSMENT. THE REASONS RECORDE D BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT ARE QUOTED BY LD. COMMISSIONER OF INCOME TAX(APPEALS) IN HIS ORDER. FOR THE SAKE OF CONVENIENCE IT IS NECESSARY TO REFER TO THEM HERE AS WELL AS UNDER: IN THIS CASE, A TAX EVASION PETITION WAS RECEIVED BY THE DDIT(INV.) UNIT-1(4), AHMEDABAD. IN THE PETITION, IT WAS ALLE GED THAT SHRI. BHARAT PATEL HAD RECEIVED A SUM OF RS. 28 LACS AS H IS SHARE ON SALE OF JOINT PROPERTY A FLAT BEARING NO. D-5, SEA FACE PARK, 50, BHULABHAI DESAI ROAD, BOMBAY-26 ON WHICH NO CAPITAL GAIN WAS PAID BY HIM. THE DDIT(INV.) RECORDED A STATEMENT U/S. 131(1A) OF THE I.T. ACT ON 9.10.1998. IN STATEMENT RECORDED THAT HE HAD RE CEIVED A SHARE OF 30% FROM THE SALE OF ABOVE PROPERTY. THE ASSESS EE CLAIMED THAT HE HAS DISCLOSED THE CAPITAL GAIN IN HIS RETURN OF INCOME AND THE DETAILS WILL BE SUBMITTED ON 26.10.1998. HOWEVER, THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE REGARDING CAPITAL GAIN DIS CLOSED IN THE RETURN OF INCOME AND TAXES PAID THEREON. THE PROPE RTY IN QUESTION WAS SOLD ON 15.1.1989 FOR RS. 84 LACS. THE COPY OF CERTIFICATE OF COMPETENT AUTHORITY IN FORM NO. 37 1 AND A COPY OF CONSENT DECREE BETWEEN THE FOUR JOINT OWNERS OF THE PROPERTY IN TH E COURT OF CIVIL JUDGE, MUMBAI WAS ALSO RECEIVED ALONGWITH THE LETTE R OF DDIT(INV.). AS PER THE STATEMENT GIVEN BY THE ASSE SSEE, HE HAD RECEIVED RS. 25,20,000/- FROM THE PROPERTY SOLD. ON RECEIPT OF INFORMATION FROM THE DDIT(INV.), A PR OPOSAL FOR REOPENING THE ASSESSMENT WAS SUBMITTED TO THE JT. C IT, RANGE-8, AHMEDABAD. THE JT. CIT, RANGE-8, AHMEDABAD VIDE HI S LETTER DATED 31.3.1999 APPROVED THE PROPOSAL FOR REOPENING THE ASSESSMENT AND IN VIEW OF THE SAME NOTICE U/S. 148 DTD. 9.4.1999 3 ITA NO.553/AHD/2005 (ASSESSMENT YEAR 1989-1990) WAS ISSUED AND SERVED UPON THE ASSESSEE ON 9.4.1999 . IN RESPONSE, THE ASSESSEE VIDE LETTER DATED 21.4.1999, SUBMITTED THAT THE RETURN OF INCOME FILED ON 26.10.1990 IN THE OFFICE OF ITO, WARD.2, MEHSANA MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148. 3. THIS ASSESSMENT WAS REOPENED ON THE BASIS OF STA TEMENT OF THE ASSESSEE RECORDED BY DDIT(INV.) THAT, HE RECEIVED A SUM OF RS. 25,20,000/- ON SALE OF PROPERTY ALONGWITH TWO OTHER S, BUT NO EVIDENCE WAS FURNISHED THAT THE SAID SUM WAS DECLARED IN THE RETURN OF INCOME OR THAT THERE WAS AN EVIDENCE OF RETURN HAVING BEEN FI LED DECLARING THE ABOVE SUM RECEIVED. THE LD. COMMISSIONER OF INCOME TAX(A PPEALS) CONFIRMED THE REOPENING OF THE ASSESSMENT UNDER SEC TION 148(1) AS ASSESSEE FAILED TO PRODUCE EVIDENCE IN SUPPORT OF T HE CLAIM OF FILING OF THE RETURN, NO ORIGINAL COPY OF THE ACKNOWLEDGEMENT OR COPY OF ORIGINAL RETURN OR THE ENCLOSURES THERETO WERE FILED. THE A SSESSEE PRODUCED A XEROX COPY OF AGREEMENT WHICH WAS CONSIDERED AS INA DMISSIBLE. THE LD. COMMISSIONER OF INCOME TAX(APPEALS) ALSO CONFIR MED THE ACTION OF THE ASSESSING OFFICER IN NOT ISSUING NOTICE UNDER S ECTION 143(2) AND COMPLETING THE ASSESSMENT ON THE BASIS OF NOTICE UN DER SECTION 142(1) ON THE GROUND THAT NO RETURN WAS FILED IN RESPONSE TO NOTICE UNDER SECTION 148(1). IN RESPECT OF QUANTUM ADDITION, THE LD. CO MMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTION OF THE ASSESSING OFF ICER IN TAKING SALE CONSIDERATION AT RS.25,20,000/- FOR CALCULATING LON G TERM CAPITAL GAINS AND ALSO IN NOT ALLOWING THE CLAIM OF DEDUCTION U/S 54 IN ABSENCE OF EVIDENCE OF FILING OF RETURN OF INCOME. ACCORDINGLY, THE AP PEAL OF THE ASSESSEE WAS DISMISSED. 4. BEFORE US, THE LEARNED AR FOR THE ASSESSEE SUBMI TTED THAT A FIRE BROKE OUT IN THE PREMISES OF THE ASSESSEE AND ACCOR DINGLY ALL THE 4 ITA NO.553/AHD/2005 (ASSESSMENT YEAR 1989-1990) EVIDENCES WERE DESTROYED. HE HAD A PHOTOCOPY OF AC KNOWLEDGEMENT OF THE RETURN WHICH WAS FILED BY THE ASSESSEE BEFORE A SSESSING OFFICER ALSO, IN SUPPORT OF THE CLAIM THAT IT HAS FILED A RETURN OF INCOME ON 26-10-1990, WHEREIN IT HAD DECLARED CAPITAL GAINS ON SALE OF PR OPERTY BY SHOWING FOLLOWING CALCULATIONS. STATEMENT OF CAPITAL GAIN FLAT AT SEA FACE PART (S.O.P.) 30% SHARE SELLING PRICE LESS:- EXPENSE DALALI CHARGES 50,400 TRANSFER FEE 15,000 PROP. CHARGES 22,500 BANK CHARGES 2,100 90,000 24,30,000 50,000 23,80,000 LESS :- DEDUCTIONS:- U/S. 53:- 2,00,000 X 23,80,000 = 1,88,888 25,20,000 U/S. 54 :- DEPOSITED WITH BANK FOR CONSTRUCTION OF RESIDENTIAL BALDG. 20,00,000 21,88,888 1,91,112 LESS:- DEDUCTION U/S. 48(2) 1 ST RS. 10,000/- 10,000 BAL. RS. 1,81,112/- @ 50% 90,556 1,00,556 90,556 NET CAPITAL GAIN CHARGEABLE TO TAX RS. 90,556 5 ITA NO.553/AHD/2005 (ASSESSMENT YEAR 1989-1990) 5. ONCE ASSESSEE HAS DECLARED CAPITAL GAINS THE QUE STION OF HOLDING THAT IT HAS ESCAPED ASSESSMENT DID NOT ARISE. ON B EING ASKED BY THE BENCH TO SHOW THE EVIDENCE FOR CLAIMING DEDUCTION U NDER SECTION 54 SUCH AS EVIDENCE OF DEPOSITING THE MONEY WITH THE B ANK OR WITHDRAWAL OF THE MONEY FOR CONSTRUCTION OF RESIDENTIAL PURPOSE O R THE ADDRESS OF THE RESIDENTIAL BUILDING AND DATE OF ITS CONSTRUCTION O R TAKING POSSESSION, THE LEARNED AR OF THE ASSESSEE EXPRESSED HIS INABILITY. HE SAID THAT ALL THE EVIDENCES ARE DESTROYED IN FIRE. IN SUPPORT OF HIS CLAIM HE HAD FILED AS AFFIDAVIT SWORN BY THE ASSESSEE ON 09-10-2009. LEARNED AR OF THE ASSESSEE FURTHER SUBMITTED THAT ON THE BASIS OF ACK NOWLEDGMENT OF RETURN HAVING BEEN FILED ON 26-10-1990, THE ASSESSING OFFI CER HAS RECTIFIED THE ORDER UNDER SECTION 154 PASSED ON 10-09-2002, WHERE BY INTEREST CHARGED UNDER SECTION 234B WAS WITHDRAWN. HE SUBMITTED THA T THE ASSESSING OFFICER HAD CHARGED INTEREST UNDER SECTION 234B AT RS. 33,53,760/- IN THE ASSESSMENT FRAMED UNDER SECTION 143(3)/148(1) ON 22 /03/2002. THIS INTEREST WAS WITHDRAWN UNDER SECTION 154 ON THE BAS IS OF ACKNOWLEDGMENT OF THE RETURN SHOWING FILING OF THE RETURN ON 26-10- 1990. IN THIS REGARD, HE REFERRED TO THE FOLLOWING ORDER UNDER SECTION 154: ORDER U/S. 154 OF THE I.T.ACT IN THIS CASE THE NOTICE U/S. 148 OF THE I.T. ACT WA S ISSUED ON 09-04- 1999 WHICH WAS DULY SERVED ON 9-4-99. THEREAFTER, THE ORDER U/S. 143(3) R.W.S. 147 WAS PASSED ON 22-3-2002. THE TOT AL INCOME OF THE ASSESSEE WAS ASSESSED ON RS. 21,29,250/-. DURI NG THE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT RETURN FILED BY HIM ON 26-10-1990 WITH THE ITO, WD-2, MEHSANA MAY B E TREATED AS RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S. 1 48. NO FRESH RETURN WAS SUBMITTED BY THE ASSESSEE. HOWEVER, HIS RETURN OF INCOME COULD NOT BE LOCATED FORM THE MEHSANA OFFICE . HENCE, WHILE CALCULATING THE TAX PAYABLE BY THE ASSESSEE I NTEREST U/S. 234A WAS CHARGED. THE INTEREST U/S. 234A OF RS. 33,53,7 60/- WAS CHARGED TREATING THAT THE ASSESSEE DID NOT FILED TH E RETURN. 6 ITA NO.553/AHD/2005 (ASSESSMENT YEAR 1989-1990) NOW, THE ASSESSEE VIDE LETTER DATED 12-08-2002 SUBM ITTED THAT THERE WAS A MISTAKE IN CALCULATION OF DEMAND. THE ASSESSEE HAS ALSO SUBMITTED COPY OF ACKNOWLEDGMENT OF RETURN OF INCOME FILED BY HIM FOR A.Y. 89-90 ON 26-10-90 WITH ITO, WD-2, M EHSANA VIDE RECEIPT NO. 04561. IN VIEW OF THE SAME THE INTERES T CHARGED U/S. 234A REQUIRES TO BE DELETED. THE MISTAKE BEING APP ARENT FROM RECORD IS HEREBY RECTIFIED U/S. 154 OF THE ACT. TH E TOTAL INCOME UNCHANGED AT RS. 21,29,259/-. ASSESSED ACCORDINGLY. CHARGED INTEREST U/S. 234B A S APPLICABLE. ISSUE DEMAND NOTICE AND CHALLAN. 6. THUS, HE SUBMITTED THAT FACTUM OF FILING OF THE RETURN OF THE INCOME IS ACCEPTED BY THE DEPARTMENT AND THEREFORE THERE I S NO CASE FOR REOPENING OF THE ASSESSMENT AND THEREFORE MAKING AD DITION AS DONE BY THE ASSESSING OFFICER. 7. ON THE OTHER HAND LEARNED DR SUBMITTED THAT REOP ENING OF THE ASSESSMENT CANNOT BE CHALLENGED BY SUBSEQUENT EVENT S AND EVIDENCE. THE REASONS HAVE TO BE EXAMINED ON THE BASIS OF MATERIA L RECORDED THEREIN AND CANNOT BE SUPPORTED OR ASSAILED BY SUBSEQUENT EVENT S AND EVIDENCE GENERATED SUBSEQUENTLY. IN THE PRESENT CASE ASSESS MENT WAS REOPENED ON 09-04-1999, WHEREAS ORDER UNDER SECTION 154 WAS PAS SED ON 10-09-2002. THEREFORE, ORDER UNDER SECTION 154 CANNOT BE USED F OR ASSAILING/SUPPORTING REASONS RECORDED BY THE ASSESS ING OFFICER. THE LEARNED DR RELIED ON THE DECISION OF THE HON'BLE PU NJAB AND HARYANA HIGH COURT IN THE CASE OF SARDARNI UTTAMKAUR EDUCAT ION SOCIETY VS. CIT IN ITA NO. 266 TO 270 OF 2007 PRONOUNCED ON JULY 20 08, WHEREIN IT IS HELD THAT THE BASIS FOR INITIATING THE REASSESSMENT PROCEEDINGS IS TO BE JUDGED SOLELY ON THE BASIS OF REASONS RECORDED AND INFORMATION RENDERED TO BY THE ASSESSING OFFICER IN THE REASONS FOR INIT IATING SUCH ACTION AND THE ASSESSING OFFICER CANNOT SUPPORT THE REOPENING OF THE ASSESSMENT BY 7 ITA NO.553/AHD/2005 (ASSESSMENT YEAR 1989-1990) RELYING ON THE MATERIAL OR BY MAKING INQUIRY SUBSEQ UENTLY AFTER THE DATE OF INITIATION OF THE PROCEEDINGS. THUS, THE REOPEN ING OF THE ASSESSMENT IS TO BE SEEN ON THE DATE WHEN ASSESSING OFFICER INITI ATED ACTION UNDER SECTION 147 OF THE ACT. THE LEARNED DR FURTHER SUB MITTED THAT IN THE ALTERNATIVE THE CLAIM OF THE ASSESSEE UNDER SECTION 54 HAS TO BE DISALLOWED BECAUSE THERE IS NO EVIDENCE OF INVESTME NT IN THE RESIDENTIAL BUILDING. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE REOPENING OF THE ASSESSMENT IS JUSTIFIED BECAUSE ASSESSEE HAS FAILED TO FURNISH AN Y EVIDENCE OF FILING OF THE RETURN. THE XEROX COPY OF THE ACKNOWLEDGMENT S UBMITTED BY THE ASSESSEE CANNOT BE RELIED UPON AS ASSESSEE HAS FAIL ED TO FURNISH ORIGINAL COPY OF ACKNOWLEDGMENT OR COPY OF RETURN OF INCOME CLAIMED TO BE FILED ON 26-10-1990. THE ORDER UNDER SECTION 154 PASSED ON 10-09-2002 IS A SUBSEQUENT EVENT AND CANNOT BE TAKEN INTO ACCOUNT T O STRIKE DOWN INITIATION OF PROCEEDINGS UNDER SECTION 147 AS IT I S ONLY A SUBSEQUENT EVENT WHICH DID NOT EXISTS AT THE TIME OF RECORDING REASONS UNDER SECTION 148(1). LEARNED DR HAS RIGHTLY RELIED ON THE DECIS ION OF THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN SUPPORT OF HER CON TENTIONS. THERE IS CLEARLY AN OMISSION OR FAILURE ON PART OF THE ASSES SEE TO DISCLOSE CAPITAL GAINS TO THE DEPARTMENT AND THEREFORE REOPENING IS JUSTIFIED. 9. REGARDING MERIT OF THE CASE, WE ARE OF THE VIEW THAT THE BASIS EXEMPTION AVAILABLE TO THE ASSESSEE SHOULD BE GIVEN . WE HOWEVER RESTORE THE COMPUTATION OF CAPITAL GAINS TO THE FILE OF THE ASSESSING OFFICER. SINCE THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF ITS CLAIM THAT IT HAS DEPOSITED SALE PROCEEDS IN THE BANK ACCOUNT OR IT HAS WITHDRAWN THE MONEY FROM THE BANK ACCOUNT FOR INVESTMENT IN RESID ENTIAL BUILDING OR 8 ITA NO.553/AHD/2005 (ASSESSMENT YEAR 1989-1990) THAT HE HAS ACTUALLY PURCHASED OR CONSTRUCTED A RES IDENTIAL BUILDING WITHIN THE STIPULATED PERIOD OR THAT SUCH BUILDING ACTUALL Y EXISTED OR CLAIMED BY THE ASSESSEE, WE ARE UNABLE TO UPHOLD THE CLAIM OF EXEMPTION UNDER SECTION 54. WE HOWEVER, DIRECT THE ASSESSING OFFIC ER TO COMPUTE THE CAPITAL GAIN AFRESH BY ALLOWING BASIC EXEMPTION TO THE ASSESSEE. 10. ACCORDINGLY, APPEAL OF THE ASSESSEE IS PARTLY A LLOWED BUT FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 16 TH OCTOBER, 2009. SD/- SD/- (T.K. SHARMA) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; DATED: 16/10/2009 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.
